A critical commentary on the proposals to reform India's financial system in its 2019–20 union budget

The 2019–20 Union budget aims to signal that the economic gains from cleaning of the financial system are likely to be recognizable in the future. The non‐performing assets in commercial banks have dropped substantively in last year subsequent to unprecedented recoveries over the past 4 years due to Insolvency and Bankruptcy Code and other legal measures, provision coverage ratio is now at its highest in 7 years, and domestic credit growth has risen to 13.8%. The government has smoothly carried out the consolidation of public sector banks. However, the drop in banks' NPAs appears to be reflected by a liquidity squeeze and mirrored by mounting NPAs confronting the non‐banking finance company (NBFC). In addition, the problems are acute for the analyzed sub‐group of Housing Finance Corporations. While the government has announced its decision to streamline the regulatory processes within this sub‐sector, it has mandated the banks, the chief source of funds to mobilize capital for the NBFCs that appear vital to revive India's economic growth. The government has raised tax rates for the uber‐rich and import duties on a few articles such as Gold while offering tax credits on affordable housing and electric vehicles. It has attempted to improve the microstructure of the capital markets, mitigate inefficiencies in the pension space and enhance market penetration of insurance and incentivize foreign investment through budgetary proposals. This article offers a critical commentary on the proposed policy actions.     

Dysfunctional Policy Transfer in National Tax Blacklists

Common sense and much of the policy transfer literature suggests that learning from abroad delivers better policy at lower cost. In contrast, this article argues that policy transfer in tax blacklists has been a dysfunctional process tending to replicate errors. Rather than reflecting learning, normative mimicry, or market pressures, over‐committed policymakers have responded to complexity and crisis by unreflectively cutting and pasting from foreign models. Facing a short‐term political imperative to “do something” about tax evasion in an environment of fiscal crisis, many policy makers have compiled blacklists of tax havens by copying lists of “the usual suspects” from abroad. Evidence for both the process of transfer and the dysfunctional nature of resulting policy is provided by tracking recurring errors in these lists that are unlikely to have arisen independently.     

Swiss banking secrecy and the problem of international cooperation in tax matters: A nut too hard to crack?

How was Swiss resistance to international cooperation in tax matters overcome? This article argues that while Swiss banks are structurally dependent on access to the United States (US) financial market, Switzerland is structurally dependent on the economic welfare of its largest banks. Taking advantage of a tax evasion scandal in the midst of the global financial crisis, this indirect dependence gave US law enforcement authorities the opportunity to exercise pressure on Switzerland by threatening to criminally indict Switzerland's largest bank. The tax evasion scandal and subsequent Swiss concessions to the US had two important consequences for international tax cooperation. First, the scandal provided a focal point for collective action that allowed other countries to coordinate their strategies and direct them against the country that had been identified as uncooperative. Second, the scandal undermined Switzerland's ability to impede collective action because the bank's public admission of wrongdoing demonstrated the necessity of international tax cooperation.     

Elite behaviour and citizen mobilisation

This article studies the relation between self-serving elite behaviour and citizen political participation. It uses a fixed effects approach to analyse the association between portfolio investment in tax havens and voter turnout, using data from 213 parliamentary elections in 65 countries for the period 1998–2014. For well-functioning democracies a positive relation between the use of tax havens and voter turnout is found, suggesting that self-serving elite behaviour is associated with citizen political mobilisation rather than voter apathy. The estimated relationship is stronger in the period after the 2008 economic crisis, when elite behaviour was a particularly salient issue.     

Secrecy jurisdictions and economic development in Africa: the role of sovereign spaces of exception in producing private wealth and public poverty

Abstract

This paper reviews the scope and function of secrecy jurisdictions and includes new research data on their extensive use by development finance institutions in delivering official development assistance. In order to establish what these empirical data mean in terms of economic development, the paper builds a theoretical model of secrecy jurisdictions as constructed spaces of exception and exemption. It then reviews how different economic paradigms explain, analyse and assign normative values to secrecy jurisdictions/tax havens, noting that the neoliberal account proffers ideological assumptions which cannot be empirically verified. This paper argues that the most robust evidence available indicates that secrecy jurisdictions lower ‘onshore’ rewards to national stakeholders, and critically shrink the fiscal base required for sustainable economic development. Further, the paper argues that the extensive use of secrecy jurisdictions by development finance institutions sponsors an elite financial class in recipient countries, but otherwise undermines broad-based development embedded in economic justice.     

Canada's goal in the Asia Pacific

Canada's chief goal in the Pacific is to gain a greater share in the economic growth of East Asia while promoting regional stability through middle power multilateralism. Like other Western countries in the Pacific Canada should strongly support trans‐oceanic groups like the ASEAN PMCs and the APEC group as well as the numerous non‐governmental organizations devoted to keeping the countries on both sides of the Pacific cooperating together, both developed and developing. Both the US under Clinton and Canada under Chretien seem to believe the economic future of their countries depends to a significant extent on participating in East Asian economic development. Giving good economic relations precedence over sanctions suggests that they have committed themselves to that course. If successful, Canada's regional activism may help to counter its weakening European ties and its greater absorption into North America, and it may help to increase its foreign influence and independence.     

Competing Concerns: Balancing Human Rights and National Security in US Economic Aid Allocation

This paper theorizes that the effect of human rights violations on US economic aid is conditioned by the salience of US national security concerns. National security concerns will be more salient in situations where recipients contribute to maintaining US security and in temporal eras when the USA is perceived as being under increased external threat. As the relational and temporal salience of national security increases, any negative effect of human rights violations on US economic aid should decrease. I test this hypothesis by examining US economic aid allocations to states from 1977 to 2005. The results show that the salience of national security concerns present in the US-recipient relationship does condition the relationship between human rights violations and US economic aid. There are also significant differences between different temporal eras of US foreign aid allocation. Future work should address how conflicts between interests and values in US foreign policy are negotiated.     

全球经济进入"低增长陷阱"背景下的中国财税改革研究

随着全球经济进入低增长阶段,政府宏观政策的多样化和有效性在经济周期中的调控作用不断提高.政府进行的新一轮财税制度改革既是应对全球经济低增长、国内经济换挡、中美贸易战等的重要举措,也是延续分税制改革、缓解土地财政压力和降低地方债务风险的必然结果.新一轮财税制度改革通过维持增值税"五五分享"比例以稳定和调整增值税留抵退税分担机制,后移消费税征收环节并稳步下划地方以保障地方财政收入和提高地方财政支出能力,减税降费以刺激企业创新,合理化收入分配制度以扩大内需,最终实现经济的稳定增长.新一轮财税制度改革取得预期效果,还需要完善转移支付制度、预算管理制度、债务管理制度、信息披露制度等,保障政策落到实处.     

Permanent war? The domestic hegemony of the New American militarism

Although there is an expanding body of excellent work on 9/11 and the War on Terror, and the changing forms of war‐making, militarism and imperialism, this literature lacks a sufficient critical synthesis of the historical and conjunctural events of 9/11 and its aftermath with the structural and systemic forms of US militarism and the military‐industrial complex. This article attempts a broad, critical‐theoretical analysis of the increased domestic hegemony of militarism in the US since 9/11. The article examines the complex social‐systemic interlocking of militarism with other historical, political, institutional, economic, cultural and psychological forces which tend to reinforce the hegemony of militarism and aggressive, preemptive foreign policy in the current period.     

Policy attribute framing: A comparison between three policy instruments for personal emissions reduction

A comparative experiment in the UK examined people's willingness to change energy consumption behavior under three different policy framings: energy tax, carbon tax, and personal carbon allowances (PCA). PCA is a downstream cap‐and‐trade policy proposed in the UK, in which emission rights are allocated to individuals. We hypothesized that due to economic, pro‐environmental and mental accounting drivers PCA would have greater potential to deliver emissions reduction than taxation. Participants (n = 1,096) received one version of a survey with the same energy‐behavior–related questions and identical incurred costs under one of the following framings: energy tax (where carbon was not mentioned), carbon tax, and PCA. Results suggest that policies that draw people's attention to carbon (PCA and carbon taxation) could have greater impact on their stated willingness to reduce energy consumption, and on the reduction amounts prompted, than would a non‐overt price signal (energy tax). There is mixed evidence, however, as to whether PCA or carbon taxation would produce the largest energy demand reductions. Some indication was found for a spillover toward wider carbon conservation under the PCA framing. © 2011 by the Association for Public Policy Analysis and Management.     

突发公共事件视域下应急财税政策探究

突发公共事件对经济社会运行秩序造成的冲击难以通过市场机制有效解决,国家出台应急财税政策防范化解突发公共事件造成的危机是政府义不容辞的职责。党的十九届五中全会也提出要"建立现代财税金融体制,加强财政资源统筹,增强国家重大战略任务财力保障"。2020年,我国运用一系列应急财税政策对冲新冠肺炎疫情影响,有效保障了疫情防控任务的高效落实和经济社会的恢复发展。探讨我国现行应急财税体制现状、问题及其优化策略,对于高效应对突发公共事件进而实现国家治理能力提升十分必要。     

The effect of trade openness on economic growth: Some empirical evidence from emerging market economies

This study investigates the impact of trade openness on economic growth in a panel of five emerging market economies, covering the data period from 1993 to 2016. Based on the panel estimation methods, the empirical results confirm the long‐run relationship among trade openness, economic growth, financial development, inflation, labour force, and technology, whereas the findings of long‐run elasticities show that trade openness has a positive considerable impact on economic growth. Furthermore, the heterogeneous panel non‐causality tests indicate the presence of a bidirectional causality between economic growth and inflation and a unidirectional causality that runs from economic growth to trade openness and economic growth to financial development in the short run. Finally, the findings suggested that trade openness plays a substantial role in promoting economic growth while also promoting economic development in these five emerging market economies.     

Determinants of Municipal Bond Ratings for General‐Purpose Governments: An Empirical Analysis

In the wake of the destabilization of the tax‐exempt bond insurance industry, this paper presents an ordered probit model of the determinants of the credit ratings of 965 county and city governments from throughout the nation. The underlying Moody's rating of these governments is posited as a function of a vector of publicly available economic, demographic, governmental, fiscal, and financial variables. The empirical results demonstrate the relative importance of economic base diversity, the growth rates of earnings, and population as well as existing full faith and credit debt on credit ratings. Additionally, our findings support the proposition that the existence of tax limits reduce the perception of credit quality, while expenditure limits raise credit ratings.     

CORPORATE TAX CUTS AND FOREIGN DIRECT INVESTMENT

Accurate policy evaluation is central to optimal policymaking, but difficult to achieve. Most often, analysts have to work with observational data and cannot directly observe the counterfactual of a policy to assess its effect accurately. In this paper, we craft a quasi‐experimental design and apply two relatively new methods—the difference‐in‐differences estimation and the synthetic controls method—to the policy debate on whether corporate tax cuts increase foreign direct investment (FDI). The taxation–FDI relationship has attracted wide attention because of mixed findings. We exploit a quasi‐experimental design for Russian regions, which were granted autonomy to reduce corporate profit tax in 2003, enabling them to simultaneously experiment with different tax policies. We estimate both the average and local treatment effects of two types of tax cuts on FDI inflows. We find that, on average, relative to the absence of tax cuts, nondiscriminatory tax cuts on direct investment profit increase FDI, but discriminatory tax cuts on selected government‐sanctioned investment projects do not. Yet for both types of tax cuts, local treatment effects vary dramatically from region to region. Our research has important implications for the design of tax policy and fiscal incentive, and the assessment of fiscal policy reforms.     

Effect of foreign direct investment,remittances, and foreign aid on economic growth: Evidence from two emerging South Asian economies

This paper analyzes the effect of foreign direct investment, remittances, and official development assistance on economic growth in India and Sri Lanka. The study uses annual time series data of both countries for the period 1980–2016. In order to find the short‐run and long‐run relationship among the variables, we use Granger causality test and vector error correction model. We also carry out a vector decomposition analysis to predict the forecast variance error of the future periods and impulse response function to analyze the effect of shocks in the independent variables on that of the dependent variable. Our results indicate that foreign direct investment and remittances have a significant impact on economic growth in India, whereas in Sri Lanka, foreign aid and remittances play an important role in enhancing economic growth.     

Does border enforcement deter unauthorized immigration? The case of Mexican migration to the United States of America

This paper asks whether the migration decisions of unauthorized Mexican immigrants to the USA have been influenced by stronger US border enforcement efforts since 1993 that have sharply increased the physical risk and financial cost of illegal immigration. These measures were supposed to have decreased the probability of successful entry, thereby lowering the expected benefits of migration. We carried out a logistic regression analysis of data from a recent survey of 603 returned migrants and potential first‐time migrants in rural Mexico. Our findings indicate that tougher border controls have had remarkably little influence on the propensity to migrate illegally to the USA. Political restrictions on immigration are far outweighed by economic and family‐related incentives to migrate. An alternative, labor‐market approach to immigration control with higher probability of effectiveness is outlined.     

Easy Money: Tax Exporting and State Support for Higher Education

There is a substantial literature that assesses the effects of tax‐exporting capacities on the tax structures and aggregate spending levels that state governments choose to implement, but no work exists that isolates the effects of state tax exporting on higher education spending. Using state‐level data for 1989, 1995, 2002, and 2007, we estimate for the median voter in each state the change in the marginal cost of higher education subsidization generated by tax exportation, and calculate the increased higher education spending that results. We consider three types of spending: state appropriations to public universities as well as need‐ and non‐need‐based aid awarded to in‐state students. We find that neither type of aid is responsive to the marginal cost, or tax price, faced by the median voter. However, the median voter's price elasticity of demand for state appropriations is statistically significant and negative. We find that the median voter's tax price is substantially reduced by the presence of prominent mining and tourism industries and by the federal deductibility offset available to firms. Thus, these tax‐exporting capacities exert upward pressure on voter demand for state appropriations to public universities.     

The Use of Drones in Pakistan: an Inquiry into the Ethical and Legal Issues

It is clear the United States and other major powers see drone warfare as the wave of the future. Today more than 70 countries possess drone technology and many others are seeking to acquire it. It is expected that within 20 years, there will be swarms of drones and many autonomous fighters and bombers in use around the globe. If the trends continue as anticipated, these drones will usher in a ‘boundless and borderless war without end’. The development of technological improvements will eventually lead to a militarisation of foreign policy and unnecessary conflicts. While the circumstances in Pakistan are unique, the questions surrounding the US drone programme in non‐combat zones such as Pakistan raise important issues regarding how drone use should be governed in the future. This article is an attempt to analyse legal and ethical issues raised by the US use of drone technology in non‐combat zones such as Pakistan, and it looks into its underpinnings and also its repercussions as tool in prospective warfare.     

Does social capital increase public support for economic globalisation?

The dominant explanation of public attitudes vis‐à‐vis economic globalisation focuses on re‐distributional implications, with an emphasis on factor endowments and government‐sponsored safety nets (the compensation hypothesis). The empirical implication of these theoretical arguments is that in advanced economies, on which this article focuses, individuals endowed with less human and financial capital will be more likely to experience income losses. Hence they will oppose economic openness unless they are compensated by the government. It is argued here that including social capital in the analysis can fill two gaps in explanations relying on factor endowments and the compensation hypothesis. First, generalised trust – one key aspect of social capital – constitutes a personal endowment alongside human and financial capital. Second, structural social capital – another key aspect of social capital – can be regarded as a nongovernmental social safety net that can compensate for endowment‐related disadvantages of individuals. Both aspects of social capital are expected to contribute, for distinct reasons, to more positive views on economic openness. The empirical testing relies on survey data for two countries: Switzerland and the United States. For both countries, the results indicate that generalised trust has a strong, positive effect on public opinion of economic globalisation, whereas structural social capital has no effect.     

Dynamic Revenue Curves for North Carolina Taxes

Dynamic tax analysis allows a tax rate to affect the economic base being taxed. Consequently, the relationship between a tax rate and the taxed economic base is nonlinear and includes a region where a higher (lower) tax rate results in lower (higher) tax revenues. Relationships between the economic base and the tax rate are estimated for five major taxes in North Carolina. In all but one case, a statistically significant negative effect was found for the tax rate on the economic base. Dynamic relationships were strongest for the sales tax and weakest for the unemployment compensation tax.